18 May

Buy Out Clauses in State of Arkansas’ Division I Coaching Contracts

When it comes to big-time college sports, Arkansas State University and the University of Arkansas rarely operate on a level playing field. The Hogs attract more fans, play in a bigger conference, get more national exposure and make more money.  The UA’s athletic department pulls in nearly seven times more total revenue than Arkansas States’.

But there’s one place the state of Arkansas’ largest sports programs stand on equal ground. Each school’s head football coach has a contract demanding the same amount of money for cutting out early. If the Hogs’ Bret Bielema had decided to break his six-year contract last year – his first on the job – then he would have owed the UA $3 million. Three million is also the price the Red Wolves’ Blake Anderson would have to pay if he left ASU during his first year. This equality is all the more striking because Bielema and Anderson’s salaries aren’t even close to being in the same neighborhood: Bielema makes $3.2 million a year to Anderson’s $700,000.

How these schools got to this particular $3 million figure is part coincidence, part strategy, and all a matter of context. In the biggest conferences, a $3 million “buyout” provision isn’t all that high. Not with the likes of Louisville’s Bobby Petrino walking around with a $10 million buyout. In a conference as relatively small as the Sun Belt, though, a number like this is unprecedented – much like the situation in which ASU football finds itself on the whole. “When you’ve gone through what we’ve gone through the last few years,” ASU athletic director Terry Mohajir says,  “you learn a little bit.”

 

Since 2010, ASU has hired four separate head coaches. The first of those – Hugh Freeze – had a first-year buyout of $225, 000. For succeeding coaches, that figure jumped to $700,000 , then to $1.75 million, and now to $3 million. Where it ends, nobody knows.

Black sports Arkansas

Still, fans can be certain of one thing for sure: in the world of coaches’ contracts, terms for parting ways matter every bit as much as the salary figures themselves.

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Decades ago, things were simpler. Major college football coaches signed one-year contracts for amounts that didn’t always make them their state’s highest paid public employee. If they did a good job, the contract rolled over to the next year. But things started changing in the 1980s with the advent of bigger broadcast deals and the proliferation of cable sports programming. The best coaches started going to the richest schools which were also offering higher-paying, multi-year deals. But as multi-year contracts prevailed in the late 1980s and 1990s, “the institutions began looking for a commitment from the coach,” Arkansas athletic director Jeff Long said. At first, “it was really a one-way street and now it’s evolved into a two-way street on the contractual buyout terms.”

Look at it in business terms: The institution is looking for security after investing in a risky asset – the head coach – that can add or lose a great amount of revenue. Too much of one of the other – for all programs but the very top ones – make the coach more likely to leave. That departure not only means a loss in investments until that point, but likely a substantial cut future returns, too.

 

For more, read the rest of my article as it originally published in Arkansas Money & Politics Magazine.

It’s on Page 27 of this digital version